10 AN ACT
concerning state moneys; providing for agricultural production
11 loans [and
agricultural linked deposits]; amending K.S.A. 75-4209
12 and 75-4237 and
repealing the existing sections.
13
14 Be it enacted by the Legislature of the
State of Kansas:
15 New Section
1. The provisions of sections 1 through
7[8], and
16 amendments thereto, shall be known and may
be cited as the Kansas
17 agricultural production loan deposit
program.
18 New Sec.
2. As used in this act: (a) "Agricultural production loan
19 deposit" means an investment account placed
by the director of invest-
20 ments under the provisions of article 42 of
chapter 75 of the Kansas
21 Statutes Annotated with an eligible lending
institution for the purpose of
22 carrying out the intent of this act;
23 (b) "agricultural
production loan deposit loan package" means the
24 forms provided by the state treasurer for
the purpose of applying for an
25 agricultural production loan deposit;
26 (c) "eligible
lending institution" means a bank, as defined under
27 K.S.A. 75-4201, and amendments thereto,
that agrees to participate in
28 the Kansas agricultural production loan
deposit program and is eligible
29 to be a depository of state funds; and
30 (d) "eligible
agricultural borrower" means any person, partnership or
31 family farm corporation as defined in
K.S.A. 17-5903 and amendments
32 thereto involved in farming.
33 New Sec.
3. (a) The state treasurer is hereby authorized to admin-
34 ister the Kansas agricultural production
loan deposit program. Such pro-
35 gram shall be for the purpose of providing
incentives for the making of
36 agricultural production loans. The state
treasurer shall promulgate rules
37 and regulations to carry out the provisions
of this act.
38 (b) The state
treasurer shall submit an annual report outlining the
39 status of the program to the governor and
the legislature.
40 New Sec.
4. (a) The state treasurer is hereby authorized to dissem-
41 inate information and to provide
agricultural production loan deposit loan
42 packages to the lending institutions
eligible for participation in this act.
43 (b) The
agricultural production loan deposit loan package shall be

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2

1 completed by the borrower before
being forwarded to the lending insti-
2 tution for consideration.
3 (c)
(1) An eligible lending institution that agrees to receive an
agri-
4 cultural production loan deposit
shall accept and review applications for
5 loans from eligible agricultural
borrowers. The lending institution shall
6 apply all usual lending standards to
determine the credit worthiness of
7 eligible agricultural borrowers. No
single agricultural production loan de-
8 posit loan shall exceed $250,000. The
total aggregate amount of agricul-
9 tural production loan deposit loans
under this program shall not exceed
10 $50,000,000.
11 (2) To be
eligible to obtain an agricultural production loan, an eligible
12 agricultural borrower must have a
debt-to-asset ratio of 40% or greater.
13 (3) Only one
agricultural production loan deposit loan shall be made
14 and be outstanding at any one time to any
agricultural borrower.
15 (4) No loan shall
be amortized for a period of more than eight years.
16 (d) An eligible
agricultural borrower shall certify on its loan applica-
17 tion that the reduced rate loan will be
used exclusively for the purposes
18 of this act.
19 (e) The eligible
lending institution may approve or reject an agricul-
20 tural production loan deposit loan package
based on the lending institu-
21 tion's evaluation of the eligible
agricultural borrowers included in the
22 package, the amount of the individual loan
in the package and other
23 appropriate considerations.
24 (f) The eligible
lending institution shall forward to the state treasurer,
25 an approved agricultural production loan
deposit loan package, in the
26 form and manner prescribed and approved by
the state treasurer. The
27 package shall include information regarding
the amount of the loan re-
28 quested by each eligible agricultural
borrower and such other information
29 regarding each eligible agricultural
borrower the state treasurer requires,
30 including a certification by the applicant
that such applicant is an eligible
31 agricultural borrower.
32 New Sec.
5. (a) The state treasurer may accept or reject an
agricul-
33 tural production loan deposit loan package
based on the state treasurer's
34 evaluation of whether the loan to the
eligible agricultural borrower meets
35 the purposes of this act. If sufficient
funds are not available for an agri-
36 cultural production loan deposit, then the
applications may be considered
37 in the order received when funds are once
again available subject to a
38 review by the lending institution.
39 (b) Upon
acceptance, the state treasurer shall certify to the director
40 of investments the amount required for such
agricultural production loan
41 deposit loan package and the director of
investments shall place an ag-
42 ricultural production loan deposit in the
amount certified by the state
43 treasurer with the eligible lending
institution at an interest rate, which is

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3

1 2% below the market rate provided in
K.S.A. 75-4237, and amendments
2 thereto. When necessary, the state
treasurer may request the director of
3 investments to place such
agricultural production loan deposit prior to
4 acceptance of an agricultural
production loan deposit loan package.
5 (c) The
eligible lending institution shall enter into an agricultural
pro-
6 duction loan deposit agreement with
the state treasurer, which shall in-
7 clude requirements necessary to
implement the purposes of the Kansas
8 agricultural production loan deposit
program. Such requirements shall
9 include an agreement by the eligible
lending institution to lend an amount
10 equal to the agricultural production loan
deposit to eligible agricultural
11 borrowers at an interest rate which is not
more than 2% above the market
12 rate as determined under K.S.A. 75-4237,
and amendments thereto. The
13 agreement shall include provisions for the
agricultural production loan
14 deposit to be placed for a maturity
considered appropriate in coordination
15 with the underlying agricultural production
loan. The agreement shall
16 include provisions for the reduction of the
agricultural production loan
17 deposit in an amount equal to any payment
of loan principal by the eligible
18 agricultural borrower.
19 New Sec.
6. (a) Upon the placement of an agricultural production
20 loan deposit with an eligible lending
institution, the institution shall fund
21 the loan to each approved eligible
agricultural borrower listed in the ag-
22 ricultural production loan deposit loan
package in accordance with the
23 agricultural production loan deposit
agreement between the institution
24 and the state treasurer. The loan shall be
at a rate as provided in section
25 5 and amendments thereto. A certification
of compliance with this section
26 in the form and manner as prescribed by the
state treasurer shall be
27 required of the eligible lending
institution.
28 (b) The state
treasurer shall take any and all steps necessary to im-
29 plement the Kansas agricultural production
loan deposit program.
30 New Sec.
7. The state and the state treasurer shall not be liable
to
31 any eligible lending institution in any
manner for payment of the principal
32 or interest on the loan to an eligible
agricultural borrower. Any delay in
33 payments or default on the part of an
eligible agricultural borrower does
34 not in any manner affect the agricultural
production loan deposit agree-
35 ment between the eligible lending
institution and the state treasurer.
36 New Sec.
8. The provisions of this act[sections 1 through 8, and
37 amendments thereto,] shall expire on
July 1, 2002.
38 [New Sec. 9. The
provisions of sections 9 through 16 shall be
39 known and may be cited as the Kansas
agricultural linked deposit
40 program.
41 [New Sec.
10. As used in this act: (a) "Agricultural linked de-
42 posit" means an investment account
placed by the director of in-
43 vestments under the provisions of
article 42 of chapter 75 of the

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4

1 Kansas Statutes Annotated with an
eligible lending institution for
2 the purpose of carrying out the
intent of this act;
3
[(b) "agricultural linked deposit loan package" means
the
4 forms provided by the state
treasurer for the purpose of applying
5 for an agricultural linked
deposit;
6
[(c) "eligible lending institution" means a bank, as defined
un-
7 der K.S.A. 75-4201, and amendments
thereto that agrees to par-
8 ticipate in the Kansas
agricultural linked deposit program and is
9 eligible to be a depository of
state funds; and
10 [(d) "farm
operations" means any person, partnership or fam-
11 ily farm corporation as defined in
K.S.A. 17-5903 and amendments
12 thereto involved in farming.
13 [New Sec.
11. (a) The state treasurer is hereby authorized to
14 administer the Kansas agricultural
linked deposit program. Such
15 program shall be for the exclusive
purpose of providing incentives
16 for the making of loans for the
construction of new or used grain
17 storage facilities. The state treasurer
shall promulgate rules and
18 regulations to carry out the provisions
of this act.
19 [(b) The state
treasurer shall submit an annual report outlining
20 the status of the program to the
governor and the legislature.
21 [New Sec.
12. (a) The state treasurer is hereby authorized to
22 disseminate information and to provide
agricultural linked deposit
23 loan packages to the lending
institutions eligible for participation
24 in this act.
25 [(b) The
agricultural linked deposit loan package shall be com-
26 pleted by the borrower before being
forwarded to the lending in-
27 stitution for consideration.
28
[(c) (1) An eligible lending institution that agrees to
receive
29 an agricultural linked deposit shall
accept and review applications
30 for loans from eligible farm operations.
The lending institution
31 shall apply all usual lending standards
to determine the credit wor-
32 thiness of eligible farm operations. No
single linked deposit loan
33 for the construction of new or used
grain storage facilities shall
34 exceed $50,000. The total amount of
agricultural linked deposit
35 loans shall not exceed $7,000,000 in any
one year.
36 [(2) Only one
linked deposit loan shall be made and be out-
37 standing at any one time to any farm
operation.
38 [(3) No loan
shall be amortized for a period of more than eight
39 years.
40 [(d) An
eligible farm operation shall certify on its loan appli-
41 cation that the reduced rate loan will
be used exclusively for the
42 purposes of this act.
43 [(e) The
eligible lending institution may approve or reject an

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5

1 agricultural linked deposit loan
package based on the lending in-
2 stitution's evaluation of the
eligible farm operation included in the
3 package, the amount of the
individual loan in the package, and
4 other appropriate
considerations.
5 [(f) The
eligible lending institution shall forward to the state
6 treasurer, an approved
agricultural linked deposit loan package,
7 in the form and manner prescribed
and approved by the state trea-
8 surer. The package shall include
information regarding the
9 amount of the loan requested by
each farm operation and such
10 other information regarding each farm
operation the state trea-
11 surer requires, including certification
by the applicant that such
12 applicant is an eligible farm
operation.
13 [New Sec.
13. (a) The state treasurer may accept or reject an
14 agricultural linked deposit loan package
based on the state trea-
15 surer's evaluation of whether the loan
to the eligible farm opera-
16 tion meets the purposes of this act. If
sufficient funds are not avail-
17 able for a linked deposit, then the
applications may be considered
18 in the order received when funds are
once again available subject
19 to a review by the lending
institution.
20 [(b) Upon
acceptance, the state treasurer shall certify to the
21 director of investments the amount
required for such agricultural
22 linked deposit loan package and the
director of investments shall
23 place an agricultural link deposit in
the amount certified by the
24 state treasurer with the eligible
lending institution at a zero inter-
25 est rate. When necessary, the state
treasurer may request the di-
26 rector of investments to place such
agricultural link deposit prior
27 to acceptance of an agricultural linked
deposit loan package.
28 [(c) The
eligible lending institution shall enter into an agricul-
29 tural linked deposit agreement with the
state treasurer, which
30 shall include requirements necessary to
implement the purposes
31 of the Kansas agricultural linked
deposit program. Such require-
32 ments shall include an agreement by the
eligible lending institu-
33 tion to lend an amount equal to the
agricultural linked deposit to
34 eligible farm operations at an interest
rate that does not exceed
35 4%. The agreement shall include
provisions for the agricultural
36 link deposit to be placed for a maturity
considered appropriate in
37 coordination with the underlying linked
deposit loan. The agree-
38 ment shall include provisions for the
reduction of the agricultural
39 link deposit in an amount equal to any
payment of loan principal
40 by the eligible farm operations.
41 [New Sec.
14. (a) Upon the placement of an agricultural linked
42 deposit with an eligible lending
institution, the institution shall
43 fund the loan to each approved eligible
farm operation listed in

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6

1 the agricultural linked deposit
loan package in accordance with
2 the agricultural linked deposit
agreement between the institution
3 and the state treasurer. The loan
shall be at a rate as provided in
4 section 12 and amendments thereto.
A certification of compliance
5 with this section in the form and
manner as prescribed by the state
6 treasurer shall be required of the
eligible lending institution.
7 [(b) The
state treasurer shall take any and all steps necessary
8 to implement the Kansas
agricultural linked deposit program.
9 [New
Sec. 15. The state and the state treasurer shall not
be
10 liable to any eligible lending
institution in any manner for payment
11 of the principal or interest on the loan
to an eligible farm opera-
12 tion. Any delay in payments or default
on the part of an eligible
13 farm operation does not in any manner
affect the agricultural
14 linked deposit agreement between the
eligible lending institution
15 and the state treasurer.
16 [New Sec.
16. The provisions of sections 9 through 16, and
17 amendments thereto shall expire on July
1, 2000.]
18 Sec.
9.[17.] K.S.A. 75-4209 is
hereby amended to read as follows:
19 75-4209. (a) The director of investments
may invest and reinvest state
20 moneys eligible for investment which are
not invested in accordance with
21 K.S.A. 75-4237 and amendments
thereto, in the following investments:
22 (1) Direct
obligations of, or obligations that are insured as to principal
23 and interest by, the United States of
America or any agency thereof and
24 obligations and securities of the United
States sponsored enterprises
25 which under federal law may be accepted as
security for public funds, on
26 and after the effective date of this act
moneys available for investment
27 under this subsection shall not be invested
in mortgage-backed securities
28 of such enterprises and of the government
national mortgage association,
29 except that any such mortgage-backed
securities held prior to the effec-
30 tive date of this act may be held to
maturity;
31 (2) repurchase
agreements with a bank or a primary government se-
32 curities dealer which reports to the market
reports division of the federal
33 reserve bank of New York for direct
obligations of, or obligations that are
34 insured as to principal and interest by,
the United States government or
35 any agency thereof and obligations and
securities of United States gov-
36 ernment sponsored enterprises which under
federal law may be accepted
37 as security for public funds;
38 (3) commercial
paper that does not exceed 270 days to maturity and
39 which has received one of the two highest
commercial paper credit ratings
40 by a nationally recognized investment
rating firm.
41 (b) When moneys
are available for deposit or investments, the direc-
42 tor of investments may invest in SKILL act
projects and bonds pursuant
43 to K.S.A. 19971998
Supp. 74-8920, and amendments thereto, and in state

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1 agency bonds and bond projects.
2 (c) When
moneys are available for deposits or investments, the di-
3 rector of investments may invest in
preferred stock of Kansas venture
4 capital, inc., under terms and
conditions prescribed by K.S.A. 74-8203,
5 and amendments thereto, but such
investments shall not in the aggregate
6 exceed a total amount of
$10,000,000.
7 (d) When
moneys are available for deposits or investments, the di-
8 rector of investments may invest in
loans pursuant to legislative mandates,
9 except that not more than the lesser
of 10% or $80,000,000 of the state
10 moneys shall be invested.
11 (e) Interest on
investment accounts in banks is to be paid at maturity,
12 but not less than annually.
13 (f) Investments
made by the director of investments under the pro-
14 visions of this section shall be made with
judgment and care, under cir-
15 cumstances then prevailing, which persons
of prudence, discretion and
16 intelligence exercise in the management of
their own affairs, not for spec-
17 ulation, but for investment, considering
the probable safety of their capital
18 as well as the probable income to be
derived.
19 (g) Investments
under subsection (a) or (b) of this section or under
20 K.S.A. 75-4237 shall be for a period not to
exceed four years, except that
21 agricultural production loan deposits
authorized under the provisions of
22 sections 1 through 7 and
amendments thereto, shall not exceed a period
23 [sections 1 through 8 and amendments
thereto and agricultural
24 linked deposits authorized under
sections 9 through 16, and
25 amendments thereto, shall not exceed a
period]of eight years.
26 (h) Investments
in securities under paragraph (1) of subsection (a)
27 shall be limited to securities which do not
have any more interest rate
28 risk than do direct United States
government obligations of similar ma-
29 turities. For purposes of this subsection,
"interest rate risk" means market
30 value changes due to changes in current
interest rates.
31 (i) The director
of investments shall not invest state moneys eligible
32 for investment under subsection (a), in the
municipal investment pool
33 fund, created under K.S.A.
19971998 Supp. 12-1677a, and
amendments
34 thereto.
35 (j) The director
of investments shall not invest moneys in the pooled
36 money investment portfolio in derivatives.
As used in this subsection,
37 "derivatives" means a financial contract
whose value depends on the value
38 of an underlying asset or index of asset
values.
39 (k) Moneys and
investments in the pooled money investment port-
40 folio shall be invested and reinvested by
the director of investments in
41 accordance with investment policies
developed, approved, published and
42 updated on an annual basis by the board.
Such investment policies shall
43 include at a minimum guidelines which
identify credit standards, eligible

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8

1 instruments, allowable maturity
ranges, methods for valuing the portfolio,
2 calculating earnings and yields and
limits on portfolio concentration for
3 each type of investment. Any changes
in such investment policies shall
4 be approved by the pooled money
investment board. Such investment
5 policies may specify the contents of
reports, methods of crediting funds
6 and accounts and other operating
procedures.
7 (l) The
board shall adopt rules and regulations to establish an overall
8 percentage limitation on the
investment of moneys in investments au-
9 thorized under paragraph (3) of
subsection (a), and within such author-
10 ized investment, the board shall establish
a percentage limitation on the
11 investment in any single business
entity.
12 Sec.
10.[18.] K.S.A. 75-4237 is
hereby amended to read as follows:
13 75-4237. (a) The director of investments
shall accept requests from banks
14 interested in obtaining investment accounts
of state moneys. Such re-
15 quests may be submitted any business day
and shall specify the dollar
16 amount, maturity or maturity range and
interest rate. Except as provided
17 in subsection (c), if the interest
rate bid by the bank is at or greater than
18 the market rate determined by the director
of investments in accordance
19 with subsection (b), the director of
investments is authorized to award
20 the investment account to the bidding bank
at the market rate. Awards
21 of investment accounts pursuant to this
section shall be subject to in-
22 vestment policies of the pooled money
investment board. When multiple
23 bids are received and are in excess of the
amount available for investment
24 that day for any maturity, awards shall be
made available in ascending
25 order from smallest to largest dollar
amount bid, subject to investment
26 policies of the board.
27 (b) The market
rate shall be determined each business day by the
28 director of investments, in accordance with
any procedures established
29 by the pooled money investment board.
Subject to any policies of the
30 board, the market rate shall reflect the
highest rate at which state moneys
31 can be invested on the open market in
investments authorized by sub-
32 section (a) of K.S.A. 75-4209 and
amendments thereto for equivalent
33 maturities.
34
(c) Notwithstanding the provisions of this
section, agricultural[:
(1)
35 Agricultural]production loan
deposits made pursuant to the provisions
36 of sections 1 through7[8]and amendments
thereto, shall be at 2% less
37 than the market rate provided by this
section[; and (2) agricultural link
38 deposits made pursuant to the provisions
of sections 9 through 16,
39 and amendments thereto, shall be at zero
interest rate].
40 Sec.
11.[19.] K.S.A. 75-4209 and
75-4237 are hereby repealed.
41 Sec.
12.[20.] This act shall take
effect and be in force from and after
42 its publication in the Kansas register.
43